Important FAQs
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There can be several reasons to refinance. Here are 3 popular reasons:
- Lower your monthly payments
- Pay off your mortgage faster
- Take cash out of your property
Interest rates and the term of your mortgage can affect your decision.
Closing costs can be divided into 3 main categories:
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Lender fees. Fees paid to the lender for the processing of your loan, such as discount points and origination and application fees..
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Third-party fees. Fees paid for services rendered by parties other than the lender, such as title insurance, flood certification and recording fees.
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Prepaid costs. Costs that are collected at the time of closing for items such as prepaid or per diem interest, property taxes and hazard insurance.
You will be provided with an estimate of your closing costs soon after your application has been received. These estimates will change if your loan program or loan amount changes.
Most refinance loan programs require some equity in your home to refinance. But, there are special programs that may offer more flexible requirements.
If it has been at least 12 months since you secured the second mortgage (or had a withdrawal on an equity line) and other criteria are met, you may be able to consolidate the second mortgage with the first mortgage.
You can refinance as long as your home has not been for sale within the last 6 months.
Prepayment penalties on your existing mortgage could make refinancing more costly. Check the details of your current loan agreement and be sure to factor in the cost of any prepayment penalty when you consider the benefits of refinancing.
You can get a response in less than 10 minutes when you prequalify for a mortgage refinance. There are just a few easy steps involved in the prequalification process.
Add in form to click to here to prequalify
Some form of valuation, whether an appraisal or another form, is required on every loan. There are varying degrees of valuation, depending on the loan.
Should an appraisal be required, as a standard business practice we provide each customer with a copy of the completed valuation.
The refinance closing is handled the same way your loan was closed when you first purchased your property. After your loan is approved, you’ll receive copies of documents you’ll need to sign at closing. Depending on where you live, the closing takes place at the office of a closing agent or it could involve a meeting where all related parties are present.
Closing costs can be divided into 3 main categories:
- Lender fees. Fees paid to the lender for the processing of your loan, such as discount points and origination and application fees.
- Third-party fees. Fees paid for services rendered by parties other than the lender, such as title insurance, flood certification and recording fees.
- Prepaid costs. Costs that are collected at the time of closing for items such as prepaid or per diem interest, property taxes and hazard insurance.
- You will be provided with an estimate of your closing costs soon after your application has been received. These estimates will change if your loan program or loan amount changes.
The amount of home you can afford is based on the amount of mortgage loan you can comfortably handle. Generally, the amount of mortgage you qualify for is based on 3 factors:
- Your monthly payments as a percentage of your income
- How much cash you have for the down payment and closing costs
There are many types of mortgages available, including mortgages tailored for first-time home buyers, low-income home buyers, and buyers who need very large loan amounts (those loans are often called jumbo loans).
The most general concepts for types of loans are as
follows:
- Fixed-rate mortgage. You pay the same interest rate and same monthly payment of principal and interest for the duration of the mortgage. The most common terms are 30, 20 and 15 years. Fixed-rate mortgages are best if you plan on being in your home for many years.
- Adjustable-rate mortgage (ARM). The interest rate stays fixed for an initial interest rate period, which typically ranges from 1 to 7 years. Then the rate will adjust up or down annually for the life of the loan based on a specified index. An ARM is a good option if you believe interest rates will go down over the next few years or if you plan on staying in your home for just a few years.
- Combination loan. A loan where you receive a first mortgage combined at the same time with a second mortgage. This option may help you avoid the costs of private mortgage insurance (PMI) and/or the higher rate of a jumbo loan.
A 15-year mortgage allows you to own your home in half the time of a conventional 30-year mortgage. Although payments are higher with a 15-year mortgage, you’ll save a considerable amount of money in interest over the life of your loan and build equity faster.
Yes. We offer special mortgage programs for individuals who meet certain income requirements, who are financing property in certain low-income areas, or who meet other special requirements.
Such loans offer:
- Lower down payments than most other financing options so you won’t need as much cash to buy a home
- Competitive interest rates
- Manageable payments for every budget
- Reduced closing costs and mortgage loan fees
Income tax reduction. In the early years of a mortgage, most of your monthly payment covers interest on the mortgage. In most cases, the mortgage interest (and property tax) may be itemized and deducted from your taxable income, lowering your overall tax bill.
Therefore, your after-tax cost of homeownership may be lower than renting. There may be tax implications if you later sell the home at a profit. Consult your tax advisor for more information.
Tax deductible borrowing power. As your home equity increases, you can borrow against it for almost any need with a home equity loan or line of credit.
Because your home equity loan or line of credit is backed by the equity in your home, you may be able to deduct that interest from your taxable income. This could lower your final tax bill. Consult your tax advisor and IRS Publication 936 (Mortgage Interest Deduction) regarding deductibility of interest.
Getting prequalified for your mortgage is an important step before you shop for a home. It tells you how much home you can buy and makes applying for your mortgage easier. A mortgage prequalification can also give you additional leverage with a seller in negotiating the best possible terms of the sale.
You can get a response in less just minutes when you prequalify for a mortgage with First Penn Financial Group. There are just a few easy steps involved in the prequalification process.
An impound/escrow account is an account set up by a lender to hold funds that are set aside for the payment of property taxes and insurance. In addition to the principal and interest payment on your mortgage loan, you may elect—or be required—to put aside additional funds each month in an impound/escrow account to pay for property taxes and mortgage and hazard insurance. The lender holds the money in an impound/escrow account and makes the payments from the account when they are due.
Having credit problems doesn’t automatically mean you can’t become a homeowner. We can help you with your questions and tell you about special loans for people with credit challenges.
You can start taking steps now to help improve your credit rating and your qualifications for loan approval. Here are a few quick tips that should help:
- Review your credit report and have any errors corrected
- Pay all your bills on time
- Make adjustments to how and when you use your credit cards
- Avoid credit-repair companies who charge a fee for services
- Work with reputable nonprofit credit counseling organizations
